Government manipulation of the definition of poverty will soon insure that every American will end up being counted as poor. If you think that's an exaggeration, then you haven't been paying attention to changes in the way the Census Bureau measures poverty.
A directive to the bureau from the Office of Management and Budget in 1978 altered the metrics for determining who is poor. It mandated a more complex formula for defining poverty, including the use of income thresholds, family size, geographic location, benefits and scores of other economic benchmarks.
The result has been that the numbers of poor people in the United States increase annually, irregardless of the economy. Under the current census formula, the bureau recently reported there were 47.8 million people living in poverty in the world's wealthiest country at the end of 2009.
When Americans think of the poor, they imagine homeless, starving people, without adequate clothing whose very existence is threatened. The reason for this perception is that the media, federal government, charitable organizations and churches have churned out propaganda portraying a distorted stereotype of the poor.
The only problem is that an average poor person in America today does not fit that stereotype. In reporting the poverty figures, the mainstream media consciously ignored census and research data that would have shed more light on what it means to live in poverty today.
For example, there is data that shows 43 percent of all poor households own their own homes. That average home is a three-bedroom with one-and-a-half baths, a garage and a patio. More than half of all poor households report having a car, air conditioning, color television, VCR, cable TV, a cell phone, refrigerator and stove. Forty percent own computers. More than 35 percent have answering machines.
This data comes from two sources: the Census Bureau and the Residential Energy Consumption Survey, conducted regularly by the Department of Energy. The later research provides a broad measurement of household amenities and home ownership.
Under the Census Bureau's definition, a household can still be counted as "poor" with an income of more than $47,000. Since the national median household income is $50,221, that means nearly one half of all Americans could conceivably be deemed in poverty in the not too distant future.
If that seems far fetched, consider the Census Bureau revised its poverty formula again for 2009. That adjustment alone added four million more Americans to the rolls of the poor. After originally reporting there were 43.6 million poor people, the bureau changed its methodology and this month raised the 2009 official count to 47.8 million.
By world standards, the American poor seem almost middle class. The average home in Europe is far smaller than the three-bedroom household owned by the American poor. The per capita income for most countries falls well below the U.S. poverty line. And that doesn't include nations on the African continent.
Here's a sample of average personal incomes from developed countries, compiled by the World Bank: Spain, $31,650; New Zealand, $29,050; Greece, $27,240; Portugal, $21,860; Korea, $19,890; Czech Republic, $17,870; Croatia, $13,760; and Chile, $9,940. The incomes are stated in dollars to make a fair comparison with the United States.
It's no secret why the federal government would want to change its criteria to raise the number of people considered poor. The more poor people the government finds; the bigger the Washington bureaucracy required to solve the issue; the more taxes needed to fund federal poverty programs.
Americans by nature are a compassionate lot. They want to assist those in need. However, government disinformation and statistical fraud unfairly distort the situation. Without reliable data, it is impossible to determine the extent of poverty and to address it adequately.
That's why ending the current census charade should be a top priority for all who really care about helping the poor.
Saturday, July 30, 2011
Monday, July 25, 2011
Obama Grounds Corporate Jet Industry
President Obama's penchant for carpet bombing successful businesses with class-warfare rhetoric reached new lows during the recent debt reduction negotiations. Using the bully pulpit afforded him by a pliant media, the president harangued tax breaks for corporate jets and their "fat cat" owners.
In what is becoming an all too familiar refrain, Obama admonished Republicans for supporting tax incentives for the rich. The president called for ending these "egregious loopholes," which allow aircraft owners faster depreciation for tax purposes.
By scrapping the tax advantage, Obama would raise $3 billion over the next 10 years, a minuscule fraction of the $4 trillion in deficit reduction that most economists agree is needed. Obviously, this wasn't about the money, but scoring political points with gullible, uniformed voters.
While the media remained silent, Obama hid the fact that his administration provided the tax incentive as part of his stimulus package in 2009. Now Obama wants to take it away while trying to portray himself as an opponent of tax breaks for corporate jet owners. It is the height of hypocrisy.
In demonizing business aviation, the president has bludgeoned one of the few successful American manufacturing sectors that has withstood the lure of moving jobs to a low wage country.
Business aviation is a $150 billion business which employs 1.2 million U.S. workers. However, the industry has suffered along with the rest of the economy. Last year the industry cranked out nearly one-third fewer planes than it manufactured in 2008. Removing tax benefits will further depress sales.
Contrary to the president's characterizations, about 85 percent of business aircraft operators are small to mid-size companies with a single plane. Only three percent of the approximately 15,000 business aircraft operating in the U.S. are registered to Fortune 500 companies. The facts don't support the president's claims of fat cat jet owners.
From a jobs perspective, the vast majority of general aviation aircraft used for business purposes are manufactured, operated, serviced and maintained in the U.S. There are thousands of jobs created by the industry at small, local firms across the country.
The president's attacks on business aviation are at odds with his public support of U.S. manufacturing. It isn't the first time that Obama has railed against corporate jets, famously scolding automobile executives for traveling to Washington on private aircraft for testimony before Congress a few years back.
Ed Bolen, president and chief executive officer for the National Business Aviation Association, was less than pleased with Obama's recent finger wagging. "The president is promoting a caricature of the industry that is very much at odds with reality of who the industry is," he said.
An official with the industry's largest union, the International Association of Machinists and Aerospace Workers, made his group's position clear, calling the president's attacks "insulting." "...I don't think he realizes how many people that this industry employs and how much revenue is brought in here from those types of aircraft," union leader Steve Rooney said.
Obama has often boasted of his goal of doubling U.S. exports in five years. Yet general aviation is one of the few manufacturers that can claim 62 percent of its business is tied to exports, according to trade and labor groups. Those exports support American jobs.
General aviation needs an improved economy to jump start sales. Instead of offering his support, the president's damaging words are adding to the woes of one of the country's manufacturing stalwarts.
Defaming whole industries is far easier than finding ways to facilitate business growth. It proves once again that President Obama cares more about agitating class envy than he does about the country's economic recovery.
In what is becoming an all too familiar refrain, Obama admonished Republicans for supporting tax incentives for the rich. The president called for ending these "egregious loopholes," which allow aircraft owners faster depreciation for tax purposes.
By scrapping the tax advantage, Obama would raise $3 billion over the next 10 years, a minuscule fraction of the $4 trillion in deficit reduction that most economists agree is needed. Obviously, this wasn't about the money, but scoring political points with gullible, uniformed voters.
While the media remained silent, Obama hid the fact that his administration provided the tax incentive as part of his stimulus package in 2009. Now Obama wants to take it away while trying to portray himself as an opponent of tax breaks for corporate jet owners. It is the height of hypocrisy.
In demonizing business aviation, the president has bludgeoned one of the few successful American manufacturing sectors that has withstood the lure of moving jobs to a low wage country.
Business aviation is a $150 billion business which employs 1.2 million U.S. workers. However, the industry has suffered along with the rest of the economy. Last year the industry cranked out nearly one-third fewer planes than it manufactured in 2008. Removing tax benefits will further depress sales.
Contrary to the president's characterizations, about 85 percent of business aircraft operators are small to mid-size companies with a single plane. Only three percent of the approximately 15,000 business aircraft operating in the U.S. are registered to Fortune 500 companies. The facts don't support the president's claims of fat cat jet owners.
From a jobs perspective, the vast majority of general aviation aircraft used for business purposes are manufactured, operated, serviced and maintained in the U.S. There are thousands of jobs created by the industry at small, local firms across the country.
The president's attacks on business aviation are at odds with his public support of U.S. manufacturing. It isn't the first time that Obama has railed against corporate jets, famously scolding automobile executives for traveling to Washington on private aircraft for testimony before Congress a few years back.
Ed Bolen, president and chief executive officer for the National Business Aviation Association, was less than pleased with Obama's recent finger wagging. "The president is promoting a caricature of the industry that is very much at odds with reality of who the industry is," he said.
An official with the industry's largest union, the International Association of Machinists and Aerospace Workers, made his group's position clear, calling the president's attacks "insulting." "...I don't think he realizes how many people that this industry employs and how much revenue is brought in here from those types of aircraft," union leader Steve Rooney said.
Obama has often boasted of his goal of doubling U.S. exports in five years. Yet general aviation is one of the few manufacturers that can claim 62 percent of its business is tied to exports, according to trade and labor groups. Those exports support American jobs.
General aviation needs an improved economy to jump start sales. Instead of offering his support, the president's damaging words are adding to the woes of one of the country's manufacturing stalwarts.
Defaming whole industries is far easier than finding ways to facilitate business growth. It proves once again that President Obama cares more about agitating class envy than he does about the country's economic recovery.
Sunday, July 17, 2011
Why the Economy Won't Soon Improve
Prospects are dim for an economic rebound unless the Obama Administration takes off its blinders long enough to see that its policies are undermining small businesses. Without vibrant small business growth, the economy will never be able to generate the jobs needed to significantly lower unemployment.
The jobs data for June was a further indictment of the president's handling of the economy. Unemployment ticked up to 9.2 percent, rising for the second straight month. The economy grew a puny 18,000 jobs in the month. Job growth at small businesses was virtually nonexistent.
To understand the scope of the problem, consider this analysis from Heritage Foundation. Using data from the Bureau of Labor, the think-thank estimated that employers must create an average of 260,000 net jobs every month until August, 2014, to lower unemployment to the normal rate. Job growth hasn't approached those numbers since the tech bubble in the late 1990s, so the odds are not good it will happen.
Changing the current direction on job growth depends on small businesses with under 500 employees. These firms represent 99.9 percent of the total of 27.5 million business operating in the United States. Large companies, including the Goliaths in Fortune's 500, account for far fewer enterprises, about 18,311 firms, according to the Small Business Administration (SBA).
Department of Labor data also shows that small businesses employ more people than their big company cousins. Fifty-two percent of the nation's workforce is employed by small businesses. In rural areas of the country, small firms' share of employment is even higher.
Nothing underscores the importance of small businesses to the economy better than job creation statistics from the SBA and Labor Department. These small firms have generated 65 percent of the net new jobs in the economy during the past 17 years.
To put that into perspective, small businesses accounted for 9.8 million of the net new jobs created between 1993 and 2009. By comparison, the corporate behemoths generated 5.2 million jobs during the same period. Clearly, small businesses hold the key to job growth.
Small businesses create their share of high tech jobs, too. Government data shows that smaller firms hire 43 percent of the scientists, engineers, computer programmers and other professionals with high-tech skills. The little guys are also more innovative, producing 13 times more patents per employee than the big boys.
Despite the obvious importance of small businesses to the economy, the Obama Administration has mostly ignored them. Billions of dollars in bailouts went to the Wall Street crowd, including big banks, financial institutions and even some of the world's largest automobile manufacturers.
While emptying the U.S. Treasury for big businesses, the president's answer for the little guys was the "Small Business Jobs Act of 2010." By any measure, the legislation has done nothing to address small businesses' problems. The National Federation of Independent Businesses, the largest association representing small firms, has pronounced the law an abject failure, falling short of dealing with "the most significant problems" facing its members.
Instead of a helping hand, the federal government has piled on more regulations for small businesses. The SBA found that the smallest firms, those with fewer than 20 employees, spend 36 percent more per worker on average to comply with federal regulations. By some estimates, the price tag for government regulations is $1.75 trillion annually.
In the latest example, the Environmental Protection Agency (EPA) has unleashed 30 new costly regulations that will further cripple small business job growth. The rules were handed down without a vote in the Congress and with no study on its impact on small businesses.
That moved the chief executive of the Small Business And Entrepreneurship Council to scold Washington for its heavy handedness. "More government spending, increased regulation and higher taxes are not economic tonics. But that is what small business owners are getting from Washington. The White House needs to wake up."
Unfortunately for small businesses, regulatory burdens aren't the only thing tamping down growth. Banks have been slow to open their vaults to small businesses desperate for capital. Business loans for under $100,000 have declined 18.1 percent during the recession, reports the Federal Reserve. The overwhelming majority of those loans are made to businesses with under 500 employees.
Small business firms rely heavily upon bank credit for injections of cash needed for everything from office space to inventory. Without financing, small businesses have to make tough choices. In 2009, the SBA reports that 660,900 small firms shuttered their doors. Another 60,837 declared bankruptcy. That same year only 552,600 small business starts up were counted by the SBA, putting growth in negative territory.
New financial regulations, many contained in the 2,300-page Dodd-Frank Wall Street Reform and Consumer Protection Act, have further crimped lending. Yet the billions of dollars in taxpayer bailouts handed to banks were supposed to allow these institutions to continue to loan money to forestall an economic catastrophe. As far as small businesses are concerned, banks are not showing them the money.
Another round of wasteful stimulus spending by the Obama Administration won't cure what ails the economy. Small businesses don't want a handout. All that is needed is for the government to lift burdensome regulations and make it easier for banks to resume lending at normal levels.
Don't expect an about face from the administration. It has shown a callous disregard for all things small. Big businesses have feasted at the government money trough, sucking up most of the financial aid. In an election year, it's not surprising the Obama Administration has chosen to lavish more attention on large firms because it gives them access to fat cat political donors.
By abandoning small businesses, the president has not only jeopardized the nation's chances at regaining its economic footing, but he has exposed his ignorance about job creation in the United States.
The jobs data for June was a further indictment of the president's handling of the economy. Unemployment ticked up to 9.2 percent, rising for the second straight month. The economy grew a puny 18,000 jobs in the month. Job growth at small businesses was virtually nonexistent.
To understand the scope of the problem, consider this analysis from Heritage Foundation. Using data from the Bureau of Labor, the think-thank estimated that employers must create an average of 260,000 net jobs every month until August, 2014, to lower unemployment to the normal rate. Job growth hasn't approached those numbers since the tech bubble in the late 1990s, so the odds are not good it will happen.
Changing the current direction on job growth depends on small businesses with under 500 employees. These firms represent 99.9 percent of the total of 27.5 million business operating in the United States. Large companies, including the Goliaths in Fortune's 500, account for far fewer enterprises, about 18,311 firms, according to the Small Business Administration (SBA).
Department of Labor data also shows that small businesses employ more people than their big company cousins. Fifty-two percent of the nation's workforce is employed by small businesses. In rural areas of the country, small firms' share of employment is even higher.
Nothing underscores the importance of small businesses to the economy better than job creation statistics from the SBA and Labor Department. These small firms have generated 65 percent of the net new jobs in the economy during the past 17 years.
To put that into perspective, small businesses accounted for 9.8 million of the net new jobs created between 1993 and 2009. By comparison, the corporate behemoths generated 5.2 million jobs during the same period. Clearly, small businesses hold the key to job growth.
Small businesses create their share of high tech jobs, too. Government data shows that smaller firms hire 43 percent of the scientists, engineers, computer programmers and other professionals with high-tech skills. The little guys are also more innovative, producing 13 times more patents per employee than the big boys.
Despite the obvious importance of small businesses to the economy, the Obama Administration has mostly ignored them. Billions of dollars in bailouts went to the Wall Street crowd, including big banks, financial institutions and even some of the world's largest automobile manufacturers.
While emptying the U.S. Treasury for big businesses, the president's answer for the little guys was the "Small Business Jobs Act of 2010." By any measure, the legislation has done nothing to address small businesses' problems. The National Federation of Independent Businesses, the largest association representing small firms, has pronounced the law an abject failure, falling short of dealing with "the most significant problems" facing its members.
Instead of a helping hand, the federal government has piled on more regulations for small businesses. The SBA found that the smallest firms, those with fewer than 20 employees, spend 36 percent more per worker on average to comply with federal regulations. By some estimates, the price tag for government regulations is $1.75 trillion annually.
In the latest example, the Environmental Protection Agency (EPA) has unleashed 30 new costly regulations that will further cripple small business job growth. The rules were handed down without a vote in the Congress and with no study on its impact on small businesses.
That moved the chief executive of the Small Business And Entrepreneurship Council to scold Washington for its heavy handedness. "More government spending, increased regulation and higher taxes are not economic tonics. But that is what small business owners are getting from Washington. The White House needs to wake up."
Unfortunately for small businesses, regulatory burdens aren't the only thing tamping down growth. Banks have been slow to open their vaults to small businesses desperate for capital. Business loans for under $100,000 have declined 18.1 percent during the recession, reports the Federal Reserve. The overwhelming majority of those loans are made to businesses with under 500 employees.
Small business firms rely heavily upon bank credit for injections of cash needed for everything from office space to inventory. Without financing, small businesses have to make tough choices. In 2009, the SBA reports that 660,900 small firms shuttered their doors. Another 60,837 declared bankruptcy. That same year only 552,600 small business starts up were counted by the SBA, putting growth in negative territory.
New financial regulations, many contained in the 2,300-page Dodd-Frank Wall Street Reform and Consumer Protection Act, have further crimped lending. Yet the billions of dollars in taxpayer bailouts handed to banks were supposed to allow these institutions to continue to loan money to forestall an economic catastrophe. As far as small businesses are concerned, banks are not showing them the money.
Another round of wasteful stimulus spending by the Obama Administration won't cure what ails the economy. Small businesses don't want a handout. All that is needed is for the government to lift burdensome regulations and make it easier for banks to resume lending at normal levels.
Don't expect an about face from the administration. It has shown a callous disregard for all things small. Big businesses have feasted at the government money trough, sucking up most of the financial aid. In an election year, it's not surprising the Obama Administration has chosen to lavish more attention on large firms because it gives them access to fat cat political donors.
By abandoning small businesses, the president has not only jeopardized the nation's chances at regaining its economic footing, but he has exposed his ignorance about job creation in the United States.
Sunday, July 10, 2011
Debt Ceiling Charade Masks Worse Problem
With each ticking second, the United States marches inexorably closer to reaching the end of its legal ability to borrow more money. The cash spigot will shut off when the federal debt hits $14.294 trillion, officially on August 2 according to the Treasury Department.
However, that deadline is just another part of the charade created by the media and the president. Here's what the politicians don't want you to know: the country actually bumped up against the legal debt ceiling on May 16. For the most part, the media has ignored that fact to shield the president.
In spite of the legislative mandated ceiling, the government (with the full knowledge of Congress) has continued to incur more debt because Treasury Secretary Tim Geithner has been clearing headroom by suspending investments in the retirement fund for federal employees. Those "investments" were being made with borrowed money.
In the ultimate shell game, Treasury technically can claim it has not exceeded the limit by sticking government IOU's in the federal retirement fund. It doesn't change the fact that the government has rung up more debt, but the money won't be "borrowed" until the ceiling gets raised.
As a result of this sham, the country's outstanding debt now rests at a staggering $14,343,033,186,678.55. That figure rises every hour, every minute, every second of every day. In the time it has taken you to read to this point, another $2.8 million has been added to the federal debt.
While Obama attempts to broker a deal to increase borrowing and save his failing presidency, the nation watches in mostly stunned disbelief as he continues to sell the idea that the collapse of the United States is imminent if the debt ceiling remains in place. If only the country can borrow a few more trillion dollars, the United States will be spared from financial ruin, the president contends.
To parody the president's favorite phrase, let's be clear about this: the United States has a debt problem. Borrowing even more money does nothing to address the issue. In fact, borrowing deepens the financial hole by raising interest payments on debt which worsens the federal deficit.
No politician dares mention the relentless raid on the nation's treasury to finance the current mountain of debt. In June alone, your government wrote a check for $110.5 billion just to pay the interest on the trillions of dollars it owes to investors. The country still owes every penny of the principal amount of $13,343,033,186,678.55. A sizable portion of that debt--$4.3 trillion--is held by foreign governments.
Last year the federal government paid $413.9 billion in interest alone to satisfy its financial obligations. In the first nine months of the current government fiscal year (October, 2010-June, 2011), the United States shelled out $385.8 billion just to meet the interest due to lenders. At this rate, the government will easily surpass the record of $451 billion paid in interest in fiscal year 2008.
Interest on debt is now the federal budget's fifth largest item. Debt costs rank only behind entitlements and defense and domestic security in the budget. No doubt interest payments will consume a larger share of the budget each fiscal year as the current historically low borrowing costs inevitably begin to escalate. The Federal Reserve can only suppress interest rates for so long. Even a quarter-percent increase in borrowing costs will have a grave impact on interest payments.
The debate over the debt ceiling has muted the alarms bells created by the ballooning interest on borrowed money. With government debt climbing at an annual rate of 8.5 percent since 2009, the nation has arrived at a critical tipping point, where interest payments are a threat to cratering the economy.
No Democrat or Republican has yet stepped up to the issue. Everyone in Washington, from the President on down, wants you to believe that borrowing more money ends the financial crisis and provides the country breathing room to address runaway budget deficits.
However, the interest payments on debt have helped create the very deficits that has everyone concerned. Unless the nation quits its borrowing habit, default on the national debt will be no less an issue than if the ceiling remains in place.
As the president often says, it is time for the Congress to act like adults. The only way out of this sticky financial mess is for the adults in the House and Senate to just say "HELL NO" to increasing the debt.
However, that deadline is just another part of the charade created by the media and the president. Here's what the politicians don't want you to know: the country actually bumped up against the legal debt ceiling on May 16. For the most part, the media has ignored that fact to shield the president.
In spite of the legislative mandated ceiling, the government (with the full knowledge of Congress) has continued to incur more debt because Treasury Secretary Tim Geithner has been clearing headroom by suspending investments in the retirement fund for federal employees. Those "investments" were being made with borrowed money.
In the ultimate shell game, Treasury technically can claim it has not exceeded the limit by sticking government IOU's in the federal retirement fund. It doesn't change the fact that the government has rung up more debt, but the money won't be "borrowed" until the ceiling gets raised.
As a result of this sham, the country's outstanding debt now rests at a staggering $14,343,033,186,678.55. That figure rises every hour, every minute, every second of every day. In the time it has taken you to read to this point, another $2.8 million has been added to the federal debt.
While Obama attempts to broker a deal to increase borrowing and save his failing presidency, the nation watches in mostly stunned disbelief as he continues to sell the idea that the collapse of the United States is imminent if the debt ceiling remains in place. If only the country can borrow a few more trillion dollars, the United States will be spared from financial ruin, the president contends.
To parody the president's favorite phrase, let's be clear about this: the United States has a debt problem. Borrowing even more money does nothing to address the issue. In fact, borrowing deepens the financial hole by raising interest payments on debt which worsens the federal deficit.
No politician dares mention the relentless raid on the nation's treasury to finance the current mountain of debt. In June alone, your government wrote a check for $110.5 billion just to pay the interest on the trillions of dollars it owes to investors. The country still owes every penny of the principal amount of $13,343,033,186,678.55. A sizable portion of that debt--$4.3 trillion--is held by foreign governments.
Last year the federal government paid $413.9 billion in interest alone to satisfy its financial obligations. In the first nine months of the current government fiscal year (October, 2010-June, 2011), the United States shelled out $385.8 billion just to meet the interest due to lenders. At this rate, the government will easily surpass the record of $451 billion paid in interest in fiscal year 2008.
Interest on debt is now the federal budget's fifth largest item. Debt costs rank only behind entitlements and defense and domestic security in the budget. No doubt interest payments will consume a larger share of the budget each fiscal year as the current historically low borrowing costs inevitably begin to escalate. The Federal Reserve can only suppress interest rates for so long. Even a quarter-percent increase in borrowing costs will have a grave impact on interest payments.
The debate over the debt ceiling has muted the alarms bells created by the ballooning interest on borrowed money. With government debt climbing at an annual rate of 8.5 percent since 2009, the nation has arrived at a critical tipping point, where interest payments are a threat to cratering the economy.
No Democrat or Republican has yet stepped up to the issue. Everyone in Washington, from the President on down, wants you to believe that borrowing more money ends the financial crisis and provides the country breathing room to address runaway budget deficits.
However, the interest payments on debt have helped create the very deficits that has everyone concerned. Unless the nation quits its borrowing habit, default on the national debt will be no less an issue than if the ceiling remains in place.
As the president often says, it is time for the Congress to act like adults. The only way out of this sticky financial mess is for the adults in the House and Senate to just say "HELL NO" to increasing the debt.
Monday, July 4, 2011
Texas & California: A Cautionary Tale of Two States
Texas and California are two states rocked by economic earthquakes that are pulling each in opposite directions. California, once a growth powerhouse, is languishing in the throes of economic upheaval, while Texas is shaking up its economy with unparalleled business development.
This state of economic affairs was well documented in a recent USA Today article which marveled at Texas' business gains, calling the growth "one of the biggest economic shifts in the past half-century." Based on federal data, Texas has leapfrogged New York and is now the country's second-largest economy behind only California. And the gap is narrowing.
The newspaper relied on recently released data from the Bureau of Economic Analysis for its analysis. The verdict underscores how tax, labor and regulatory laws created by state legislatures directly impact economic growth in ways both harmful and helpful.
Despite the obvious factors shaping each state's business environment, USA Today viewed the differences as little more than luck. In its article, the newspaper quoted an economic forecaster from academia who accounted for Texas growth as equal parts "good planning and good fortune."
In a classic case of numbing stupidity or journalistic bias, the national newspaper concluded that the "economic winners of the last decade are states that focus on raw materials, government and senior citizens." Really? Apparently, the folks at USA Today are clueless about what drives business expansion.
States like Texas, where Republicans hold big legislative majorities, have outperformed the rest of the pack by making it easier for businesses to relocate, operate and prosper in the state. The losers, like Democrat Party controlled California, are heaping onerous regulation, taxes and labor laws upon the backs of business, stifling economic growth.
USA Today ignored these facts because an honest analysis would have exposed the Democratic Party's propensity for tax, labor and regulatory policies that are crippling economic development, both regionally and on the national level. With a little digging, here's what the newspaper would have found:
Texas is one of 22 states with right-to-work laws, which prevent employees from being forced to join a union as a condition of employment. This not only safeguards employees' rights, but attracts businesses suffering under the iron fist of union rules. On the other hand, California is one of 28 states that have bowed to union pressure to outlaw right-to-work rules. As a result, the Bureau of Labor reports that 17.2 percent of California workers belong to unions, even higher than the national average of 12 percent. Only 5.1 percent of the Texas workforce is represented by a union. Studies have shown that right-to-work states enjoy higher job growth. That research helps explain why unemployment in Texas was 8.0 percent at the end of May according to the Labor Bureau, while the jobless rate was 11.7 percent in California, significantly above the 9.1 percent national average.
Texas is one of seven states with no personal income tax, leaving consumers with more discretionary income to spend on goods and services. A family of three with a household income of $50,000 in Los Angeles pays the government 10.6 percent of their income. Tack on sales taxes and the burden becomes even worse. California's state sales tax is 9.25 percent with some cities and counties piling on local sales taxes on top of that, making it the highest in the nation. Texas is among the lowest at 6.25 percent. High taxes raise the cost of living for families, leaving households with less money to spend with local businesses.
Texas has no corporate profits tax, although it collects franchise fees. In 2006, the Texas legislature overhauled the tax structure providing for $3 billion in tax relief for business, reducing their tax burden by 33 percent. In contrast, the California legislature has saddled businesses with a 8.84 percent tax on profits. Banks and financial institutions pay an even higher rate of 10.84 percent. In weighing corporate tax burdens, the nonpartisan Tax Foundation ranked Texas 13th for its business friendly system, while California was nearly dead last at 48. It is no wonder that California's share of the national economy shrank faster than all but three states from 2000 to 2010, according to Bureau of Economic Analysis figures. Meanwhile, Texas' historic growth spurt during that same period has hiked the state's share of the U.S. economy to 8.3 percent.
Regulations on Texas businesses pale in comparison to California's bloated system of legal handcuffs. The governor's office in California released a study in 2009 that calculated the total cost of business regulation in the state at an astounding $492.994 billion. In addition, the analysis estimated that over regulation of business had robbed California of nearly 4 million jobs. Another California state-sponsored study this year, dubbed the "Commission on the 21st Century Economy," determined that the cost of doing business in California was almost 23 percent higher (on average) than other states.
Clearly, by any objective measurement California is overtaxed, overregulated, over unionized and overrated as a place to do business. The state will continue to shed jobs and spiral deeper into economic decline as a result of Democrats' tax and spend policies that have driven California to the brink of bankruptcy.
Don't expect any sympathy from Texas, which has targeted California businesses as part of its economic development program. With an economic output valued at more than $1 trillion annually and expanding, Texas has set its sights on wrestling away the No. 1 ranking from California.
When that happens, as it surely will, perhaps Californians will finally tire of the Democratic Party's anti-business policies in the once Golden State.
This state of economic affairs was well documented in a recent USA Today article which marveled at Texas' business gains, calling the growth "one of the biggest economic shifts in the past half-century." Based on federal data, Texas has leapfrogged New York and is now the country's second-largest economy behind only California. And the gap is narrowing.
The newspaper relied on recently released data from the Bureau of Economic Analysis for its analysis. The verdict underscores how tax, labor and regulatory laws created by state legislatures directly impact economic growth in ways both harmful and helpful.
Despite the obvious factors shaping each state's business environment, USA Today viewed the differences as little more than luck. In its article, the newspaper quoted an economic forecaster from academia who accounted for Texas growth as equal parts "good planning and good fortune."
In a classic case of numbing stupidity or journalistic bias, the national newspaper concluded that the "economic winners of the last decade are states that focus on raw materials, government and senior citizens." Really? Apparently, the folks at USA Today are clueless about what drives business expansion.
States like Texas, where Republicans hold big legislative majorities, have outperformed the rest of the pack by making it easier for businesses to relocate, operate and prosper in the state. The losers, like Democrat Party controlled California, are heaping onerous regulation, taxes and labor laws upon the backs of business, stifling economic growth.
USA Today ignored these facts because an honest analysis would have exposed the Democratic Party's propensity for tax, labor and regulatory policies that are crippling economic development, both regionally and on the national level. With a little digging, here's what the newspaper would have found:
Texas is one of 22 states with right-to-work laws, which prevent employees from being forced to join a union as a condition of employment. This not only safeguards employees' rights, but attracts businesses suffering under the iron fist of union rules. On the other hand, California is one of 28 states that have bowed to union pressure to outlaw right-to-work rules. As a result, the Bureau of Labor reports that 17.2 percent of California workers belong to unions, even higher than the national average of 12 percent. Only 5.1 percent of the Texas workforce is represented by a union. Studies have shown that right-to-work states enjoy higher job growth. That research helps explain why unemployment in Texas was 8.0 percent at the end of May according to the Labor Bureau, while the jobless rate was 11.7 percent in California, significantly above the 9.1 percent national average.
Texas is one of seven states with no personal income tax, leaving consumers with more discretionary income to spend on goods and services. A family of three with a household income of $50,000 in Los Angeles pays the government 10.6 percent of their income. Tack on sales taxes and the burden becomes even worse. California's state sales tax is 9.25 percent with some cities and counties piling on local sales taxes on top of that, making it the highest in the nation. Texas is among the lowest at 6.25 percent. High taxes raise the cost of living for families, leaving households with less money to spend with local businesses.
Texas has no corporate profits tax, although it collects franchise fees. In 2006, the Texas legislature overhauled the tax structure providing for $3 billion in tax relief for business, reducing their tax burden by 33 percent. In contrast, the California legislature has saddled businesses with a 8.84 percent tax on profits. Banks and financial institutions pay an even higher rate of 10.84 percent. In weighing corporate tax burdens, the nonpartisan Tax Foundation ranked Texas 13th for its business friendly system, while California was nearly dead last at 48. It is no wonder that California's share of the national economy shrank faster than all but three states from 2000 to 2010, according to Bureau of Economic Analysis figures. Meanwhile, Texas' historic growth spurt during that same period has hiked the state's share of the U.S. economy to 8.3 percent.
Regulations on Texas businesses pale in comparison to California's bloated system of legal handcuffs. The governor's office in California released a study in 2009 that calculated the total cost of business regulation in the state at an astounding $492.994 billion. In addition, the analysis estimated that over regulation of business had robbed California of nearly 4 million jobs. Another California state-sponsored study this year, dubbed the "Commission on the 21st Century Economy," determined that the cost of doing business in California was almost 23 percent higher (on average) than other states.
Clearly, by any objective measurement California is overtaxed, overregulated, over unionized and overrated as a place to do business. The state will continue to shed jobs and spiral deeper into economic decline as a result of Democrats' tax and spend policies that have driven California to the brink of bankruptcy.
Don't expect any sympathy from Texas, which has targeted California businesses as part of its economic development program. With an economic output valued at more than $1 trillion annually and expanding, Texas has set its sights on wrestling away the No. 1 ranking from California.
When that happens, as it surely will, perhaps Californians will finally tire of the Democratic Party's anti-business policies in the once Golden State.
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